An Open Letter

I recently received a letter in response to an email I sent out promoting a video I prepared on the benefits of buying versus renting. Here is the letter and my response:

Jeff, Thank you for this great video. It is a tough market and I guess if

anyone apart from big investors had a little cash or in fact no cash but

everything else was good could really make some money.

I have often said, " if only we knew that home values would increase in

7 or so years we could really have made some money." but no one is

doing anything.....I am waiting for everyone to "wake up" and the economic

unemployment situation to improve a bit, so there is more of a guarantee.

JS

"JS:

I believe that it is our duty to spread the word and to influence those who most need to take advantage of this great market. I feel that now is absolutely the time to move with courage and conviction and stop buying into the fear mentality. We, the long time professionals, have a responsibility to make things happen! Use this video! Send the link to all of those people you have in your database who are worried about their future. The current economic situation is the exact reason that those people should be buying.

Once this market turns around (and it will) the pent up demand created by this market is likely to cause a huge spike in demand and force bidding wars and price hikes like we saw just a few years ago. Don't ever doubt the cyclical trends in the real estate market. History tells us that this WILL happen. Doubt my words? Just look at Southern California in the mid 1990s. Employment sank, prices dropped like a rock and no one could sell a piece of real estate to save their life. By the late 1990s and all the way until 2005 real estate skyrocketed! Even here in Oregon we had terrible unemployment in the 80s but by 1992 Springfield was posting returns at over 18% per year. This current situation may appear more extreme but you must continue to believe.

Do your clients a favor and make sure they really understand how the real estate market works; how any market works. Make sure they are not like all the others and buy high and sell low. Make sure they understand what we already know in our hearts to be true, that real estate is the best investment and that the most important investment you can make is in your own home.

NOW GO SELL SOMETHING!

 

Jeffrey "

If you've ever wanted to buy real estate either as your own home or for investment there really hasn't been a better time. According to the National Association of Realtors the last two months have been the best time since at least 1970 to buy a home. Now is the time. Call me if you want to get more information at 541-342-2535 or email me at jeff@evergreenpacificmtg.com.

Mortgage Market Update from Our Friends at Mortgage Market Guide

Last Week in Review

 

 

They say no news is good news. But perhaps the more important question this week is will the Fed's news from their latest Federal Open Market Committee Meeting be good news for rates and the economy? Here's what you need to know. Last week, the Fed released their Interest Rate and Policy Statement after their latest regularly-scheduled meeting of the Federal Open Market Committee. While there was speculation ahead of time that the Fed may decide to buy more longer-term Treasuries, which could jumpstart the cycle needed to eventually bring home loan rates down, the Fed did not make any changes to the Fed Funds Rate or their Bond purchase program. The one change from the prior meeting's statement was that the Fed now does not see deflation as a risk. While this is good news, it also means that there could be a real threat of inflation down the road. And remember, inflation is bad for Bonds and home loan rates, so this could have a big impact on rates in the longer term! There was good news in the Personal Income Report as personal income rose in June by its biggest gain in over a year. The increase in income led to higher consumer spending and savings in June. Spending rose for the first time in three months, while the savings rate climbed to its highest level since December 1993 as the chart below shows. ----------------------- Chart: Personal Savings Rate 1990 to 2009 Keep in mind that a high savings rate is a double-edged sword ... it's good to see people saving, but spending is the lifeblood of a strong economy. The Durable Goods Report also brought good news, as did Consumer Sentiment, which was better than expected. Durable Orders came in better than expected for May, led by orders for airplanes and machinery. Although one report doesn't make a trend, the reading is encouraging and may signal that the economic slump is starting to ease. But there was still disappointing news on the housing and job market fronts. Both New and Existing Home Sales came in below expectations and Initial Jobless Claims came in a bit worse than expected, indicating that the job market continues to be weak and slow in stabilizing. After all the news of the week, Bonds and rates managed to break above important technical levels to end the week .25 percent better than where they began with a little help from some solid Treasury auction results. FORGETTING SOMEONE'S NAME IS NEVER GOOD NEWS! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME GREAT MEMORY IMPROVING TIPS.

 

Forecast for the Week

 

 

A holiday-shortened week is ahead, but that doesn't mean there won't be any news. Tuesday's Consumer Confidence Report will show us how consumers are behaving based on recent economic news and may indicate if increased consumer spending is likely to continue. There will also be important news to note in Thursday's Jobs Report for June, especially given the mix of good and bad news in May's Report. On the good side, the number of Jobs lost in May was much lower than expected. However, the unemployment rate (which is determined from a different survey) came in higher than expected. As mentioned above, last week's Initial Jobless Claims were worse than expected, so this week's report will be interesting to see. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and rates were able to break above an important level with help from the Treasury auctions. I'll be watching to see if Bonds and rates are able to remain above this level and improve further. Both the Stock and Bond markets will be closed on Friday, July 3 for Independence Day. Have a safe holiday. Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jun 26, 2009)

 

Debt Consolidation Analysis

Debt Consolidation Analysis

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Alternative Economics

My friend and mentor, Steve Hettema,wrote an article a little while back that I feel really encapsulates what I am trying to do here with "Wealth Matters". In fact, I so wholeheartedly beleive in Steve's message that I joined his National organization of investment clubs, the NSIC, and started my own chapter called The Willamette Investor Group.http://www.willametteinvestorgroup.com. Steve will alos be in Eugene on June 13th for a full day event we have opened to the public (http://OregonBootCampBlitz.com).

To read Steve's article you can go to http://ezinearticles.com/?id=1248224

First Time Homebuyer Tax Credit

Never More Affordable

For the last 39 years the National Association of Realtors (NAR) has been gauging the affordability of homes across the US. Amazingly, the number just released is the best number since the report began. What this means is that this is the absolute best time to buy a home since 1970. Actually, since the report is only 39 years old it is possible, and likely, that this is the best time in nearly 50 years to buy a home. With rates having gone even lower since the report came out affordability is now through the roof and it's time to buy. Take a look at the history of the index and see for yourself what a great time it is: http://www.mortgagemarketguide.com/download/conarchy/Affordability_1970_88.pdf

http://www.mortgagemarketguide.com/download/conarchy/Affordability_1989_2009.pdf

8000 tax credits, low rates and now the most affordable housing market in a generation. GET MOVING!

New Lending Changes to Get You Buying

Two new important changes have happened in the world of home loans. The first and best publicized is the new $8000 tax credit being offered to first tiime homebuyers. Unlike the current credit this one does not have to be paid back if you stay in the home for at least three years. This credit is for home purchases from January 1st till the end of November, 2009 and will give the full $8000 credit to any first time buyer earning up to $75,000 as an individual or up to $150,000 as a couple. However, you do not need to have paid income taxes to receive a credit. This is an improvement over last years attempt at a $7,500 "credit" that was actually a long term interest free loan from the government. The prior credit was a turnoff to many would be buyers because it felt like you were being forced into a situation where you owed the government money for the next 15 years.

The second change comes for investors who own more than four financed properties. As I wrote in my last entry currently both Fannie Mae and Freddie Mac have reduced the number of financed properties a person can have all the way down to four. Although to some people this may sound like a lot of real estate there are tens of thousands of investors who have been taken out of the market at a time when we need well qualified buyers to buy as much of the inventory of available homes as possible. Now, recent changes in these guidelines once again will put the number back up to ten allowing these buyers the chance to buy up the over abundant inventory of homes and help stabilize the market. I would argue that theses people are exactly the kind of people who should be able to take advantage of this market. These are the buy and hold landlords who keep property forever and whose job it is to provide quality housing to tenants. Bravo to Fannie and Frddie for seeing it MY way.

If you've been reading my prior posts you know there are still a couple of imortant changes that need to happen (ie, Seller funded DPAs via HR 600 and the reintroduction of Stated Income loans done the old fashoined way) but these are definitely two important steps in the right direction.